Despite the speed of the annual growth rate for renewables in recent times, oil and gas will hold more than half of the energy demand in a few more decades to come, Secretary General of OPEC, Mohammed Sanusi Barkindo, has said.
Speaking yesterday at the 5th Kuwait Oil & Gas Show with theme ‘New Energy Era: Transformation, Diversification and Integration’, Barkindo said the combined contribution of renewables, hydro, nuclear and biomass is expected to account for just 26% of the global energy mix, an increase of 7% today.
According to him, oil and gas combined are still expected to provide more than half of the world’s energy need by 2040, with their combined share relatively stable between 52-53% over the almost 25-year forecast period.
Barkindo said: “Thus, in looking ahead, we need to be realistic about what each energy source can provide, and continually look to transform how we extract, process, supply and use all the energies needed in the future.
“In terms of oil, we expect it to reach over 111mb/d by 2040, an increase of around 15 mb/d. We are expected to hit 100 mb/d during the course of this year, much earlier than initially forecast. On top of this, we should also remember that oil producers and companies must invest heavily simply to offset the impact of natural decline rates, which is annually around 4 mb/d.”
The OPEC Secretary General also stated that, “For oil, it means that there is no expectation for a peak in oil demand over the forecast period to 2040. This is not only the projection of OPEC, but the International Energy Agency (IEA) too.”
He said to put this into an investment perspective, in the period to 2040 the required global oil sector investment is estimated at a huge $10.5 trillion. This also needs to be placed in the context of the fact that globally more than a trillion dollars of frozen capex or cuts were witnessed during 2015 and 2016.
“This should not only be through the concerted and continued development of renewable energies. It also needs to be through the development of technologies in the oil & gas industry to enhance efficiencies, in both production and use, streamline working practices, and further improve their environmental footprint.
“This requires innovation and human ingenuity, just as it has in the past. For example, our industry has seen technological innovation move E&P opportunities from onshore to offshore, then to deep water and frontier regions, and most recently to unconventionals.
“Improvements in the quantity and quality of information about different geological formations have meant we have been able to find more oil and gas,” he said.
When looking at recovery rates, technological developments have helped increase these from less than 10% of oil in place in the early history of the industry to more than 70% in some fields today.